(2) HOME OWNERS' LOAN ACT.-The first sentence of section 5(b)(1)(B) of the Home Owners' Loan Act (12 U.S.C. 1464(b)(1)(B)) is amended by striking "savings association may not-" and all that follows through "(ii) permit any" and inserting "savings association may not permit any".
(3) FEDERAL DEPOSIT INSURANCE ACT.-Section 18(g) of the Federal Deposit Insurance Act (12 U.S.C. 1828(g)) is amended to read as follows:
(b) EFFECTIVE DATE.-The amendments made by subsection (a) shall take effect at the end of the 2-year period beginning on the date of the enactment of this Act.
SEC. 704. PAYMENT OF INTEREST ON RESERVES AT FEDERAL RESERVE BANKS.
(a) IN GENERAL.-Section 19(b) of the Federal Reserve Act (12 U.S.C. 461(b)) is amended by adding at the end the following new paragraph:
"(12) EARNINGS ON RESERVES.-
"(A) IN GENERAL.-Balances maintained at a Federal reserve bank by or on behalf of a depository institution may receive earnings to be paid by the Federal reserve bank at least once each calendar quarter at a rate or rates not to exceed the general level of short-term interest rates.
"(B) REGULATIONS RELATING TO PAYMENTS AND DISTRIBUTION.-The Board may prescribe regulations concerning-
"(i) the payment of earnings in accordance with this paragraph;
"(ii) the distribution of such earnings to the depository institutions which maintain balances at such banks or on whose behalf such balances are maintained; and
"(iii) the responsibilities of depository institutions, Federal home loan banks, and the National Credit Union Administration Central Liquidity Facility with respect to the crediting and distribution of earnings attributable to balances maintained, in accordance with subsection ©(1)(A), in a Federal reserve bank by any such entity on behalf of depository institutions.
"© DEPOSITORY INSTITUTIONS DEFINED.-For purposes of this paragraph, the term 'depository institution', in addition to the institutions described in paragraph (1)(A), includes any trust company, corporation organized under section 25A or having an agreement with the Board under section 25, or any branch or agency of a foreign bank (as defined in section 1(b) of the International Banking Act of 1978).".
(b) AUTHORIZATION FOR PASS THROUGH RESERVES FOR MEMBER BANKS.-Section 19(c)(1)(B) of the Federal Reserve Act (12 U.S.C. 461(c)(1)(B)) is amended by striking "which is not a member bank".
© CONSUMER BANKING COSTS ASSESSMENT.-
(1) IN GENERAL.-The Federal Reserve Act (12 U.S.C. 221 et seq.) is amended-
(A) by redesignating sections 30 and 31 as sections 31 and 32, respectively; and
(B) by inserting after section 29 the following new section:
"SEC. 30. SURVEY OF BANK FEES AND SERVICES.
"(a) ANNUAL SURVEY REQUIRED.-The Board of Governors of the Federal Reserve System shall obtain annually a sample, which is representative by type and size of the institution (including small institutions) and geographic location, of the following retail banking services and products provided by insured depository institutions and insured credit unions (along with related fees and minimum balances):
"(1) Checking and other transaction accounts.
"(2) Negotiable order of withdrawal and savings accounts.
"(3) Automated teller machine transactions.
"(4) Other electronic transactions.
"(b) MINIMUM SURVEY REQUIREMENT.-The annual survey described in subsection (a) shall meet the following minimum requirements:
"(1) CHECKING AND OTHER TRANSACTION ACCOUNTS.-Data on checking and transaction accounts shall include, at a minimum, the following:
"(A) Monthly and annual fees and minimum balances to avoid such fees.
"(B) Minimum opening balances.
"© Check processing fees.
"(D) Check printing fees.
"(E) Balance inquiry fees.
"(F) Fees imposed for using a teller or other institution employee.
"(G) Stop payment order fees.
"(H) Nonsufficient fund fees.
"(I) Overdraft fees.
"(J) Deposit items returned fees.
"(K) Availability of no-cost or low-cost accounts for consumers who maintain low balances.
"(2) NEGOTIABLE ORDER OF WITHDRAWAL ACCOUNTS AND SAVINGS ACCOUNTS.-Data on negotiable order of withdrawal accounts and savings accounts shall include, at a minimum, the following:
"(A) Monthly and annual fees and minimum balances to avoid such fees.
"(B) Minimum opening balances.
"© Rate at which interest is paid to consumers.
"(D) Check processing fees for negotiable order of withdrawal accounts.
"(E) Fees imposed for using a teller or other institution employee.
"(F) Availability of no-cost or low-cost accounts for consumers who maintain low balances.
"(3) AUTOMATED TELLER TRANSACTIONS.-Data on automated teller machine transactions shall include, at a minimum, the following:
"(A) Monthly and annual fees.
"(B) Card fees.
"© Fees charged to customers for withdrawals, deposits, and balance inquiries through institution-owned machines.
"(D) Fees charged to customers for withdrawals, deposits, and balance inquiries through machines owned by others.
"(E) Fees charged to noncustomers for withdrawals, deposits, and balance inquiries through institution-owned machines.
"(F) Point-of-sale transaction fees.
"(4) OTHER ELECTRONIC TRANSACTIONS.-Data on other electronic transactions shall include, at a minimum, the following:
"(A) Wire transfer fees.
"(B) Fees related to payments made over the Internet or through other electronic means.
"(5) OTHER FEES AND CHARGES.-Data on any other fees and charges that the Board of Governors of the Federal Reserve System determines to be appropriate to meet the purposes of this section.
"(6) FEDERAL RESERVE BOARD AUTHORITY.-The Board of Governors of the Federal Reserve System may cease the collection of information with regard to any particular fee or charge specified in this subsection if the Board makes a determination that, on the basis of changing practices in the financial services industry, the collection of such information is no longer necessary to accomplish the purposes of this section.
"© ANNUAL REPORT TO CONGRESS REQUIRED.-
"(1) PREPARATION.-The Board of Governors of the Federal Reserve System shall prepare a report of the results of each survey conducted pursuant to subsections (a) and (b) of this section and section 136(b)(1) of the Consumer Credit Protection Act.
"(2) CONTENTS OF THE REPORT.-In addition to the data required to be collected pursuant to subsections (a) and (b), each report prepared pursuant to paragraph (1) shall include a description of any discernible trend, in the Nation as a whole, in a representative sample of the 50 States (selected with due regard for regional differences), and in each consolidated metropolitan statistical area (as defined by the Director of the Office of Management and Budget), in the cost and availability of the retail banking services, including those described in subsections (a) and (b) (including related fees and minimum balances), that delineates differences between institutions on the basis of the type of institution and the size of the institution, between large and small institutions of the same type, and any engagement of the institution in multistate activity.
"(3) SUBMISSION TO CONGRESS.-The Board of Governors of the Federal Reserve System shall submit an annual report to the Congress not later than June 1, 2005, and not later than June 1 of each subsequent year.
"(d) DEFINITIONS.-For purposes of this section, the term 'insured depository institution' has the meaning given such term in section 3 of the Federal Deposit Insurance Act, and the term 'insured credit union' has the meaning given such term in section 101 of the Federal Credit Union Act.".
(2) CONFORMING AMENDMENT.-
(A) IN GENERAL.-Paragraph (1) of section 136(b) of the Truth in Lending Act (15 U.S.C. 1646(b)(1)) is amended to read as follows:
"(1) COLLECTION REQUIRED.-The Board shall collect, on a semiannual basis, from a broad sample of financial institutions which offer credit card services, credit card price and availability information including-
"(A) the information required to be disclosed under section 127(c) of this chapter;
"(B) the average total amount of finance charges paid by consumers; and
"© the following credit card rates and fees:
"(i) Application fees.
"(ii) Annual percentage rates for cash advances and balance transfers.
"(iii) Maximum annual percentage rate that may be charged when an account is in default.
"(iv) Fees for the use of convenience checks.
"(v) Fees for balance transfers.
"(vi) Fees for foreign currency conversions.".
(B) EFFECTIVE DATE.-The amendment made by subparagraph (A) shall take effect on January 1, 2004.
(3) REPEAL OF OTHER REPORT PROVISIONS.-Section 1002 of Financial Institutions Reform, Recovery, and Enforcement Act of 1989 and section 108 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 are hereby repealed.
(d) TECHNICAL AND CONFORMING AMENDMENTS.-Section 19 of the Federal Reserve Act (12 U.S.C. 461) is amended-
(1) in subsection (b)(4) (12 U.S.C. 461(b)(4)), by striking subparagraph (C) and redesignating subparagraphs (D) and (E) as subparagraphs (C) and (D), respectively; and
(2) in subsection ©(1)(A) (12 U.S.C. 461(c)(1)(A)), by striking "subsection (b)(4)(C)" and inserting "subsection (b)".
SEC. 705. INCREASED FEDERAL RESERVE BOARD FLEXIBILITY IN SETTING RESERVE REQUIREMENTS.
Section 19(b)(2)(A) of the Federal Reserve Act (12 U.S.C. 461(b)(2)(A)) is amended-
(1) in clause (i), by striking "the ratio of 3 per centum" and inserting "a ratio not greater than 3 percent (and which may be zero)"; and
(2) in clause (ii), by striking "and not less than 8 per centum," and inserting "(and which may be zero),".
SEC. 706. TRANSFER OF FEDERAL RESERVE SURPLUSES.
(a) IN GENERAL.-Section 7(b) of the Federal Reserve Act (12 U.S.C. 289(b)) is amended by adding at the end the following new paragraph:
"(4) ADDITIONAL TRANSFERS TO COVER INTEREST PAYMENTS FOR FISCAL YEARS 2003 THROUGH 2007.-
"(A) IN GENERAL.-In addition to the amounts required to be transferred from the surplus funds of the Federal reserve banks pursuant to subsection (a)(3), the Federal reserve banks shall transfer from such surplus funds to the Board of Governors of the Federal Reserve System for transfer to the Secretary of the Treasury for deposit in the general fund of the Treasury, such sums as are necessary to equal the net cost of section 19(b)(12) in each of the fiscal years 2003 through 2007.
"(B) ALLOCATION BY FEDERAL RESERVE BOARD.-Of the total amount required to be paid by the Federal reserve banks under subparagraph (A) for fiscal years 2003 through 2007, the Board of Governors of the Federal Reserve System shall determine the amount each such bank shall pay in such fiscal year.
"© REPLENISHMENT OF SURPLUS FUND PROHIBITED.-During fiscal years 2003 through 2007, no Federal reserve bank may replenish such bank's surplus fund by the amount of any transfer by such bank under subparagraph (A).".
(b) TECHNICAL AND CONFORMING AMENDMENT.-Section 7(a) of the Federal Reserve Act (12 U.S.C. 289(a)) is amended by adding at the end the following new paragraph:
"(3) PAYMENT TO TREASURY.-During fiscal years 2003 through 2007, any amount in the surplus fund of any Federal reserve bank in excess of the amount equal to 3 percent of the paid-in capital and surplus of the member banks of such bank shall be transferred to the Secretary of the Treasury for deposit in the general fund of the Treasury.".
SEC. 707. RULE OF CONSTRUCTION.
In the case of an escrow account maintained at a depository institution in connection with a real estate transaction-
(1) the absorption, by the depository institution, of expenses incidental to providing a normal banking service with respect to such escrow account;
(2) the forbearance, by the depository institution, from charging a fee for providing any such banking function; and
(3) any benefit which may accrue to the holder or the beneficiary of such escrow account as a result of an action of the depository institution described in subparagraph (1) or (2) or similar in nature to such action,
shall not be treated as the payment or receipt of interest for purposes of this Act and any provision of Public Law 93-100, the Federal Reserve Act, the Home Owners' Loan Act, or the Federal Deposit Insurance Act relating to the payment of interest on accounts or deposits at depository institutions, provided, however, that nothing herein shall be construed so as to require a depository institution that maintains an escrow account in connection with a real estate transaction to pay interest on such escrow account or to prohibit such institution from paying interest on such escrow account. Nor shall anything herein be construed to preempt the provisions of law of any State dealing with the payment of interest on escrow accounts maintained in connection with real estate transactions.
The CHAIRMAN pro tempore. Pursuant to House Resolution 566, the gentlewoman from New York (Mrs. Kelly) and a Member opposed each will control 5 minutes.
The Chair recognizes the gentlewoman from New York (Mrs. Kelly).
Mrs. KELLY. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, I also want to thank the gentleman from Pennsylvania (Mr. Toomey) for his collaboration on this proposal and Members of the Committee on Rules for allowing this amendment to be considered today.
Most Americans with checking accounts would be shocked to learn that if they started their own business, any checking account they establish for that business would be prohibited from earning any interest. Yet that is the case today. Checking accounts held by small businesses are banned by Federal law from collecting the interest that money would earn if it were held by an individual.
The amendment I am offering addresses this matter and it has been pending before Congress for some time now. This body has actually passed this measure by voice vote not once, not twice, but actually three times; twice in the last Congress, and once earlier in the earlier year in this Congress.
Unfortunately, the job is not yet done. So I am coming again in the hope that we will finally be able to send this language to the President's desk.
The provisions in this amendment will go a long way in helping our main street banks and small businesses which are essential to growth and communities and our overall economy. The Business Checking Freedom Act contains a number of important provisions. First, it repeals the 70-year-old law prohibiting banks from paying interest on business checking accounts after a transition period. And while I believe it should be repealed entirely, a bipartisan group of Members have agreed that a proper transition period is necessary.
We are also aware of the potential impact of an outright repeal of the law. That is why a transition period is crucial. And we will continue to work to ensure that the needs of our smaller banks are being addressed. As a result, the legislation includes a 2-year transition period contained in the bill.
I would also like to say that I share and recognize the concerns of some Members with regard to the ILCs and will work with my colleagues, including the gentleman from Ohio (Mr. Gillmor) and the gentleman from Massachusetts (Mr. Frank) to achieve a remedy to the concerns that have been raised about the ILCs.
The legislation is important. It allows banks to increase money market deposits and savings account sweeps from the current 6 to 24 times a month. This gives banks an increase in their sweep activities, increasing the interest which businesses can make on their accounts.
The final provision gives the Federal Reserve the opportunity to pay interest on the reserves that the banks need to keep within the Federal Reserve system. And Chairman Greenspan has repeatedly testified that he is in favor of this provision.
It also gives the Fed the flexibility to lower reserve requirements, which enables the Fed to have greater control to maintain reserves at specific and consistent levels. This language will help foster healthy receiver balances and reduce the potential for volatility within the bank Federal funds rate protecting the Federal Reserve's ability to conduct monetary policy.
Quite simply, this legislation is about creating a new and broader market option and supporting our small businesses at the same time. The amendment allows banks to pay interest on business checking accounts and increase sweeps activities. The amendment also allows the Fed to pay interest on the sterile reserves that banks are required to keep with them and lower reserve requirements.
The amendment does not require or mandate anything. It allows the market to create change and not the government.
I want to thank the gentleman from Pennsylvania (Mr. Toomey) once again for working so closely with me on this proposal. I thank Members for considering, once again, this important legislation. I have been working on it for many years. I really am pleased to be able to bring it to the floor.
I ask my colleagues on both sides of the aisle to join me in strong support for this commonsense amendment that will help banks and small businesses fuel the economy.
Mr. Chairman, I reserve the balance of my time.
Mr. FRANK of Massachusetts. Mr. Chairman, in the apparent absence of anyone in opposition, I would ask for the time.
The CHAIRMAN pro tempore. Without objection, the gentleman is recognized for 5 minutes.
There was no objection.
Mr. FRANK of Massachusetts. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, this is, as I think has been made clear, a bill that has already passed the House. Clearly the former reasons for the prohibition on interest on business checking accounts no longer make sense in light of the current economy.
I appreciate the gentlewoman from New York (Mrs. Kelly) alluding to the issue of the ILCs. When we had originally dealt with this, it had been my hope as this bill went forward in the other body, the compromise we had adopted could be considered there. For a variety of reasons this did not go forward in the other body. And the rules prohibit me from commenting on whether or not anyone ought to be surprised by the absence of that progress, so I shall not.
But this, once again, we hope will go forward; because it is, I think, an important thing especially, as has been clear, for the small businesses. Interest on their checking accounts, if you are a smaller business and you have to maintain a large percentage of your funds in checking accounts for a variety of reasons, then the lack of interest could become a significant factor.
So I hope that this will ultimately pass, but I do hope that the ILC issue will get some further attention.
Mr. Chairman, I yield back the balance of my time.
Mrs. KELLY. Mr. Chairman, I yield my remaining minute to the gentleman from Pennsylvania (Mr. Toomey.)
Mr. FRANK of Massachusetts. Mr. Chairman, I ask unanimous consent to reclaim my time, and I also yield 1 minute to the gentleman from Pennsylvania (Mr. Toomey).
The CHAIRMAN pro tempore. Without objection, the gentleman from Massachusetts may reclaim his time.
There was no objection.
The CHAIRMAN pro tempore. The gentleman from Pennsylvania
(Mr. Toomey) is recognized for 2 minutes.
Mr. TOOMEY. Mr. Chairman, I would like to thank my colleague, the gentlewoman from New York (Mrs. Kelly), as well as my colleague, the gentleman from Massachusetts (Mr. Frank) for kindly yielding time.
Certainly I rise in strong support of this amendment. I want to congratulate the gentlewoman from New York (Mrs. Kelly) for her leadership on this issue for a number of years.
This amendment simply is going to help small businesses. It is going to help small banks. It is going to help promote a rational allocation of resources and a free economy. It makes a lot of sense. In fact, it is hard to believe we ever passed a law that said it ought to be illegal to pay interest on deposits, any kind of deposits. But that is the fact. It is on the books. And I am hoping that today we take a big step in the direction of repealing this ban.
This amendment itself really reflects the confluence of two separate bills, one that I had introduced, one that the gentlewoman from New York (Mrs. Kelly) had introduced. And together they really simply amount to a commonsense reduction of long-outdated, unnecessary regulations.
Again, the people that are most harmed by the current regulation are the people operating small businesses, the people who have modest accounts, the people who have not got sophisticated Treasury operations to circumvent the regulations, and the people who therefore really need this help.
It will help small businesses do a host of things that they could do with a little more resources, whether it is hiring another employee, whether it is buying some more equipment, defraying other costs, it just makes a lot of sense.
I should observe that the Federal Reserve and the Treasury Department both fully support this legislation for a variety of reasons, not the least of which it will make banking services less expensive, more directly responsive to customers' needs, and basically every industry group that has looked at this legislation supports it as well, from the U.S. Chamber of Commerce, the NFIB, America's Community Bankers, to the Association for Financial Professionals. Pretty much there is a broad consensus that this is just a commonsense thing to do.
So I, again, would like to thank the gentleman from Massachusetts (Mr. Frank) for his cooperation, the gentlewoman from New York (Mrs. Kelly) for her years of service on this issue. I urge my colleagues to adopt this amendment.
The CHAIRMAN pro tempore. The question is on the amendment offered by the gentlewoman from New York (Mrs. Kelly).
The question was taken; and the Chairman pro tempore announced that the ayes appeared to have it.
Mrs. KELLY. Mr. Chairman, I demand a recorded vote.
The CHAIRMAN pro tempore. Pursuant to clause 6 of rule XVIII, further proceedings on the amendment offered by the gentlewoman from New York (Mrs. Kelly) will be postponed.
SEQUENTIAL VOTES POSTPONED IN COMMITTEE OF THE WHOLE
The CHAIRMAN pro tempore. Pursuant to clause 6 of rule XVIII, proceedings will now resume on those amendments on which further proceedings were postponed in the following order: amendment number 4 offered by the gentleman from New York (Mr. Weiner); amendment number 5 offered by the gentlewoman from Texas (Ms. Jackson-Lee); and amendment number 6 offered by the gentlewoman from New York (Mrs. Kelly).
The Chair will reduce to 5 minutes the time for any electronic vote after the first vote in this series.
AMENDMENT NO. 4 OFFERED BY MR. WEINER
The CHAIRMAN pro tempore. The pending business is the demand for a recorded vote on the amendment offered by the gentleman from New York (Mr. Weiner) on which further proceedings were postponed and on which the noes prevailed by voice vote.
The Clerk will redesignate the amendment.
The Clerk redesignated the amendment.
The CHAIRMAN pro tempore. A recorded vote has been demanded.
A recorded vote was ordered.
The vote was taken by electronic device, and there were-ayes 167, noes 255, not voting 11, as follows:
[Roll No. 66]
Davis, Jo Ann
Sánchez, Linda T.
Johnson, E. B.